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SEC halts trading in spam-touted stocks
Published: 2007-03-09

The U.S. Securities and Exchange Commission announced on Thursday that the agency had suspended trading in the securities of 35 companies whose stock was touted by bulk e-mail campaigns.

The effort, dubbed "Operation Spamalot," is the largest every aimed at spam-touted stocks. The suspensions affect securities that are not listed on any exchange or the Over The Counter (OTC) Bulletin Board but quoted on the Pink Sheets, a listing service for stocks that typically are thinly traded. The Pink sheets has no listing requirements, according to the SEC. Each of the companies has had its stock price significantly manipulated by a spam e-mail campaign.

"When spam clogs our mailboxes, it is annoying," SEC chairman Christopher Cox, said in a statement announcing the suspensions. "When it rips off investors, it's illegal and destructive. Today's trading suspensions, and actions that will follow, should send a clear message to spammers: The SEC will hold you accountable."

Stock-touting bulk e-mail campaigns have become more popular. A year ago, stock spam made up only about 5 percent of all spam e-mail messages, but the category is now on a trajectory to claim more than a third of all bulk marketing e-mails, according to security firms. In January, two researchers published a paper that found that the fraudsters behind stock-touting e-mail campaigns typically make nearly 6 percent returns on the pumped-up stock if they follow a simple strategy. Follow-on traders that buy the touted stock lose more than 5 percent in two days, the paper stated.

The SEC has increased its attack on fraudulent e-mail campaigns, and other illegal methods, that aim to pump up a company's stock price. In December, agency charged a corporation located in Estonia and its Russian owner with breaking into victims' computers and using the illicit access to their brokerage accounts to drive up stock prices.

The companies affected by the SEC's latest action are: Advanced Powerline Technologies Inc. (APWL), America Asia Petroleum Corp. (AAPM), Amerossi Int'l Group, Inc. (AMSN), Apparel Manufacturing Associates, Inc. (APPM), Asgard Holdings Inc. (AGHG), Biogenerics Ltd. (BIGN), China Gold Corp. (CGDC), CTR Investments & Consulting, Inc. (CIVX), DC Brands International, Inc. (DCBI), Equal Trading, Inc. (EQTD), Equitable Mining Corp. (EQBM), Espion International, Inc. (EPLJ), Goldmark Industries, Inc. (GDKI), GroFeed Inc. (GFDI), Healtheuniverse, Inc. (HLUN), Interlink Global Corp. (ILKG), Investigative Services Agencies, Inc. (IVAY), iPackets International, Inc. (IPKL), Koko Petroleum Inc. (KKPT), Leatt Corporation (LEAT), LOM Logistics, Inc. (LOMJ), Modern Energy Corp. (MODR), National Healthcare Logistics, Inc. (NHLG), Presidents Financial Corp. (PZFC), Red Truck Entertainment Inc. (RTRK), Relay Capital Corp. (RLYC), Rodedawg International Industries, Inc. (RWGI), Rouchon Industries, Inc. (RCHN), Software Effective Solutions Corp. (SFWJ), Solucorp Industries Ltd. (SLUP), Inc. (SSUF), UBA Technology, Inc. (UBTG), Wataire Industries Inc. (WTAF), WayPoint Biomedical Holdings, Inc. (WYPH), and Wineco Productions Inc. (WNCP).

The SEC pledged to continue its investigation into the spam campaigns. The trading suspension will last ten days, the agency said.

Posted by: Robert Lemos
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